CS 101 -Tax Combined Test bank Income Tax (2022)well updated

TestqbankqIncomeqTax



CHAPTER 1: AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FEDERAL TAX LAW
q q q q q q q q q q q




1. TheqratificationqofqtheqSixteenthqAmendmentqtoqtheqU.S.qConstitutionqwasqnecessaryqtoqvalidateqtheq
Federalqincomeqtaxqonqcorporations.
a. True
b. False


ANSWER: False
RATIONALE:q TheqSixteenthqAmendmentqvalidatedqonlyqtheqtaxqonqindividuals.qTheqincomeqtaxqonqcorporationsq
hadqbeenqpreviouslyqsanctionedqbyqtheqcourts.


2. BeforeqtheqSixteenthqAmendmentqtoqtheqConstitutionqwasqratified,qthereqwasqnoqvalidqFederalqincomeq
taxqonqindividuals.
a. True
b. False


ANSWER: False
RATIONALE:
ThereqexistedqaqFederalqincomeqtaxqduringqtheqCivilqWarqthatqwasqsanctionedqbyqtheqU.S.q
SupremeqCourt.


3. Theqfirstqincomeqtaxqonqindividualsq(afterqtheqratificationqofqtheqSixteenthqAmendmentqtoqtheq
Constitution)qleviedqtaxqratesqfromqaqlowqofq2%qtoqaqhighqofq6%.
a. True
b. False


ANSWER: True


4. TheqFederalqincomeqtaxqonqindividualsqgeneratesqmoreqrevenueqthanqtheqFederalqincomeqtaxqonq
1

,corporations.




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,a. True
b. False


ANSWER: True


5. TheqpayasyougoqfeatureqofqtheqFederalqincomeqtaxqonqindividualsqconformsqtoqAdamqSmith’sqcanonqofq
certainty.
a. True
b. False


ANSWER: False
RATIONALE:q Pay-as-you-
goqrefersqtoqtheqwithholdingqprovisionsqapplicableqtoqwagesqandqotherqtypesqofqincomeqandqaddsqconvenienceqtoqt
heqtaxqsystem.


6. Becauseqtheqlawqisqcomplicated,qmostqindividualqtaxpayersqareqnotqableqtoqcompleteqtheirqFederalq
incomeqtaxqreturnsqwithoutqoutsideqassistance.
a. True
b. False


ANSWER: True
RATIONALE:q Approximatelyq60%quseqtaxqreturnqpreparers,qwhileqslightlyqmoreqthanq32%qpurchaseqtaxqreturnqsoft
ware.
7. TheqFICAqtaxq(Medicareqcomponent)qonqwagesqisqprogressiveqsinceqtheqtaxqdueqincreasesqasqwagesq
increase.
a. True
b. False


ANSWER: False
RATIONALE:q TheqFICAqtaxq(Medicareqcomponent)qisqproportionalqbecauseqtheqrateqisqconstantqregardlessqofqtheqw
agesqearned.


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, 8. TheqFederalqestateqandqgiftqtaxesqareqexamplesqofqprogressiveqtaxes.
a. True
b. False


ANSWER: True


9. TheqFederalqexciseqtaxqonqcigarettesqisqanqexampleqofqaqproportionalqtax.
a. True
b. False


ANSWER: True
RATIONALE:q Theqtaxqisqaqflatq$1.01qperqpack.


10. Currently,qtheqFederalqincomeqtaxqisqlessqprogressiveqthanqitqeverqhasqbeenqinqtheqpast.
a. True
b. False


ANSWER: False
RATIONALE:q Currently,qtheqFederalqincomeqtaxqhasqsixqrates.qAtqoneqtime,qitqhadqtwoqrates.


11. Monaqinheritsqherqmother’sqpersonalqresidence,qwhichqsheqconvertsqtoqaqfurnishedqrentqhouse.qTheseq
changesqshouldqaffectqtheqamountqofqadqvaloremqpropertyqtaxesqleviedqonqtheqproperties.
a. True
b. False


ANSWER: True
RATIONALE:qConversionqfromqresidentialqtoqrentalquseqwillqincreaseqtheqtaxes.qFurthermore,qMona’sqmotherqma
yqhaveqhadqaqseniorqcitizenqexemptionqonqtheqproperty,qwhichqwillqnoqlongerqbeqappropriate.qLastly,qtheqfurnish
ingsqinqtheqrentqhouseqcouldqnowqbeqsubjectqtoqanqadqvaloremqtaxqonqpersonalty.



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